The Star Online: Business
The Star Online: Business |
- Damage from Irene appears to be less than feared
- New York Stock Exchange ready for trading Monday
- Designer for port Samalaju Port
| Damage from Irene appears to be less than feared Posted: 28 Aug 2011 06:01 PM PDT WASHINGTON: Tropical Storm Irene's trek up the East Coast caused less damage than many had feared, a bit of reassuring news for a fragile economy. Insured damages from the storm will likely range between $2 billion and $3 billion, and total losses will likely be about $7 billion, according to preliminary estimates from Kinetic Analysis Corp., a consulting firm. Both figures are lower than had been expected, suggesting that the storm poses little threat to the nation's $14 trillion economy. Some economists said that, as with past hurricanes and earthquakes, the recovery could end up boosting growth in the coming months. Demand for building repairs might help the depressed construction industry, for example. "Irene left several places with black eyes, but it doesn't seem to have delivered an economic knockout," said Ryan Sweet, an economist at Moody's Analytics. In the short run, the costs will grow as storm-ravaged areas deal with lost business, dislocated workers and transportation delays - damage that will take months to understand. And in some areas, the impact will be measured in lost tourist dollars, canceled flights and shuttered stores. Irene slammed into a region that's vital to the economy's health. The mid-Atlantic and New England account for about 16 percent of the nation's economic output and about 14 percent of its workforce, Sweet said. But Kinetic's estimates suggest that Irene will have caused far less insured damage than the $6 billion the insurance industry paid out after Hurricane Isabel struck the East Coast in 2003. Other analysts agreed broadly with Kinetic's early estimates, saying insured losses are unlikely to exceed $4 billion. Other consultants will release their own projections this week. Sweet said small businesses on the North Carolina coast will likely lose two weekends of tourist activity, including the travel-heavy Labor Day weekend. Beach communities spanning the East Coast face the same threat. For ordinary people in hard-hit areas, Irene's costs could run high. Victims of natural disasters often lack the insurance they need to recover their losses and return to work quickly, said Susan Voss, Iowa's top insurance regulator and president of the National Association of Insurance Commissioners. People who lose homes can end up in temporary housing far from their homes and workplaces. Many don't realize that flood damage isn't covered by standard homeowner's insurance policies, Voss noted. A standard homeowner policy covers damage caused by wind or by rain through a damaged roof. A separate flood insurance policy would be needed to cover damage from rising water, such as from the storm surges unleashed by Irene. Economists said that reconstruction from Irene could increase U.S. economic growth in the October-December quarter, though the benefits will be limited by the relatively slight damage the storm caused. "This region is very highly insured, so a lot of money will start pouring in, and that should re-employ a lot of construction workers who are now out of work," said Mark Zandi, chief economist at Moody's Analytics. Zandi said. He said the benefits from rebuilding might extend into next year's January-March quarter. "That will put some people back to work, at least temporarily," said David Kotok, chairman of Cumberland Advisors. For now, power outages and flooding will close some businesses, costing workers pay and likely increasing some temporary layoffs. Transportation and shipping may also be disrupted. The length of the outages and the extent of public transportation problems in cities like New York will help determine the costs, analysts said. Such disruptions will emerge in economic data starting this coming week, when the government reports how many people applied for unemployment benefits as the storm bore down on the Southeast. Economists expect a post-storm rise in applications. One concern is that weak economic data, even if blamed on a natural disaster, could weigh on consumer confidence and make businesses reluctant to spend. But major fixtures of the economy are already returning to normal. The New York Stock Exchange and NASDAQ are preparing to open Monday. Mayor Michael Bloomberg lifted an evacuation order for lower Manhattan as of 3 p.m. Sunday. Airlines planned to resume some flights into and out of East Coast airports on Monday. Crews are already restoring power in Southern states hit by the storm and are starting work in the northeast. And Irene will add only about 15 percent to insurers' weather-related payouts this year, if the current cost estimates hold. Tornadoes, flooding and droughts in the Midwest and South have forced the industry to handle about $17 billion in weather-related claims this year. |
| New York Stock Exchange ready for trading Monday Posted: 28 Aug 2011 05:59 PM PDT NEW YORK: The opening bell at the New York Stock Exchange will ring on time Monday. Operators of the historic Big Board and other major U.S. exchanges said they plan to open for trading as usual. Their announcements came after city officials said damage from Tropical Storm Irene wasn't as severe as feared in New York's financial district. How all the people who work at the exchanges and related businesses in New York will make it to work remained a puzzle late Sunday. Limited bus service resumed in Manhattan and the Bronx Sunday evening, but it wasn't clear the city's subways and buses would be running normally in time for Monday's morning commute. And flooding and downed trees obstructed tracks throughout the commuter rail systems that bring workers in from the Connecticut, New York and New Jersey suburbs. The nation's largest mass transit system shut down ahead of the storm, and hundreds of thousands of city residents were ordered to leave threatened areas. Mayor Michael Bloomberg lifted the evacuation order for downtown Manhattan, effective 3 p.m. Weather has shut down or delayed the opening of the stock markets about two dozen times in the past. The most recent weather delay occurred Jan. 8, 1996, when the New York Stock Exchange opened 90 minutes late, at 11 a.m., due to a snowstorm. The New York Stock Exchange also closes for nine holidays a year when stock markets around the world are open. The exchanges help link buyers and sellers of stocks and other investments like commodities. So they're essential to making the world's financial markets work. Over the years, the weather has become less of a concern for markets because computerized trading has cut the need for live brokers, who used to shout all their orders out in person on the floor of major exchanges. When broker Peter Tuchman started working on the New York Stock Exchange 25 years ago, he said there were about 1,500 traders on the floor and all transactions were made through "open outcry and paper." Now he said there are just about 350 brokers on the floor. Because most transactions are electronic, the major exchanges said they were prepared to open Monday even if the storm's impact had been severe. The New York Stock Exchange said that, if it faced flooding and power outages, it could have used its electronic exchange, the NYSE Arca in Chicago. The NYSE acquired that exchange in 2006 and offers trading through it in more than 8,000 stocks and options. Nasdaq OMX Group Inc. spokesman Frank DeMaria said it could have handled trading through its exchange in Stockholm, Sweden, and additional centers in the U.S. Nasdaq, which is based in Lower Manhattan but conducts its opening and closing bell from a television studio in New York's Times Square, already is all electronic, so it doesn't even have a trading floor. The owners of the New York Mercantile Exchange, the Chicago Mercantile Exchange and the Chicago Board of Trade also expect to open normally. Those exchanges handle the buying and selling of commodities and derivatives. The question that weighed on the minds of exchange operators the past few days was not whether they technically could open. They wondered, Would it make sense to open? If there was significant damage on the East Coast, executives figured that many investors would be more focused on repairing their homes than on buying and selling stocks. "If large swaths of your membership ... can't participate in your marketplace, you have to give some real serious thought to how healthy the market would be if you would open," said Eric Noll, executive vice president of transaction services at Nasdaq. Executives from the major exchanges held a conference call Sunday afternoon with Securities and Exchange Commission officials and decided it was best to open. SEC spokesman John Nester said in an email that the exchanges' decision to open was made "in consultation with the SEC following a series of discussions throughout the weekend." The NYSE said its building on Wall Street near the southern tip of Manhattan and the systems inside are in working order. Investment banks that have offices downtown also said they would operate as usual Monday, even if employees had to work from home or find alternative ways to get to the office. Goldman Sachs Group Inc. spokesman Stephen Cohen said the firm's headquarters wasn't significantly affected by the storm, and "we'll be open for business," although he declined to be more specific. Citigroup Inc. spokeswoman Danielle Romero-Apsilos said the company's office buildings downtown were "fully functional." She added that the company was also "investigating transportation options for employees," given the uncertainty of mass transit. Richard Adamonis, a spokesman for NYSE Euronext Inc., said Deutsche Bank, the group scheduled to ring the opening bell on Monday, would be there as scheduled. - AP |
| Designer for port Samalaju Port Posted: 28 Aug 2011 05:40 PM PDT KUCHING: Bintulu Port Holdings Bhd (BPHB) has engaged KTA (Sarawak) Sdn Bhd to carry out a detailed design for the proposed Samalaju Port, a crucial component of the Sarawak Corridor of Renewable Energy (Score) to serve energy-intensive industries. Chief executive officer Datuk Mior Ahmad Baiti Mior Lub Ahmad said KTA, a leading multi-disciplinary consulting firm, was appointed last month. The new port project has been accorded top priority by the state authorities. To be located on 450ha and about 60km by road from Bintulu town, the deep sea port will primarily handle the import of raw materials and export of finished products from the industries operating in the Samalaju Industrial Park. The first batch of pioneer investors in Score - Press Metal Bhd, Japan's Tokuyama Corp, OM Materials and Asia Minerals Ltd - have started the construction of their manufacturing facilities in Samalaju Industrial Park. Press Metal is setting up a new aluminium smelter, Tokuyama is investing in a polycrystalline silicon factory while OM Materials and Asia Minerals are both building a manganese smelter. Their combined investment is estimated at RM9.5bil. Mior Ahmad said BPHB, which was tasked by the Sarawak government to spearhead the project, had received the report from PricewaterhouseCoopers, which was commissioned in April to conduct a study on the viability of the new port. Among the recommendations, Pricewaterhouse Coopers has come up with an estimated development cost of the new port but Mior Ahmad declined to reveal the price tag. Some analysts have put the port's development cost at about RM1.2bil. Also completed were the hydraulic study and an environmental impact assessment study. "We (BPHB) are preparing a draft layout plan for the approval of the state government. "We target to start preliminary works, including earthworks, on some of the proposed packages of the new port in January 2012," Mior Ahmad told StarBiz yesterday. |
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